On Thursday, following the latest dramatic moves in Tesla stocks which initially surged following Musk’s proposed “funding secured” going private tweet, then slumped when it emerged that there had been no prior discussion with investors, we suggested that Tesla may soon be the one company that is sued by both shorts and longs when the dust finally settles.

TSLA will be that one stock that sees class actions suits by both shorts and longs.

One day later, the first half of this prediction came true, when Tesla and Elon Musk were sued twice by investors who alleged the CEO fraudulently engineered a scheme to squeeze short-sellers – something Musk has previously indicated he intends on doing – through Musk’s proposal to take the electric car company private.

The lawsuits were filed three days after Musk’s shocking tweet that he was prepared to take Tesla private in a record $72 billion transaction that valued the company at $420 per share, and that “funding” had been “secured.” One day later, Bloomberg reported that the SEC has been asking inquiring about Musk’s activity and whether this funding was indeed “secured”; the alternative would indicate an attempt by the CEO to launch a short squeeze by materially misrepresenting reality, and merely expressing “wishful thinking” stated as fact.

Subsequently on Friday, Bloomberg also reported that Tesla’s Board of Directors had only now started canvassing investors and banks for interest in participating in a MBO-type transaction, implicitly confirming that Musk may have misrepresented facts, opening up the company to legal assault.

Sure enough, that’s precisely what happened, and in one of the lawsuits, plaintiff Kalman Isaacs said Musk’s tweets were false and misleading, and together with Tesla’s failure to correct them amounted to a “nuclear attack” designed to “completely decimate” short-sellers.

The lawsuit filed by Isaacs, and a second one filed by William Chamberlain said Musk’s and Tesla’s conduct artificially inflated Tesla’s stock price and violated federal securities laws.

In the lawsuit, Chamberlain claims the “defendants artificially drove the price of Tesla shares up as much as $45.47 from their August 6, 2018 closing price ($341.99), or as much as 13%, before closing at $379.57 on August 7, 2018.”

The lawsuits, filed in federal court in San Francisco, seek class-action status.

Both Isaacs and Chamberlain were short TSLA stock, a class of investors that Musk has often criticized and attacked. On May 4, Musk explicitly warned that “oh and uh short burn of the century comin soon. Flamethrowers should arrive just in time.”

Oh and uh short burn of the century comin soon. Flamethrowers should arrive just in time.

The root of the lawsuits against Tesla is that so far Musk has not yet offered any evidence that he has lined up the necessary funding to take Tesla private, and while complaints did not offer proof to the contrary both Isaacs said Tesla’s and Musk’s conduct caused the volatility that cost short-sellers hundreds of millions of dollars from having to cover their short positions, and caused all Tesla securities purchasers to pay inflated prices. In his lawsuit, Isaacs claims he bought 3,000 Tesla shares on Aug. 8 to cover his short position.

For now the stock remains just shy of all time highs, but should the SEC find malfeasance on behalf of Musk or the Board, we expect a precipitous slide in the stock price, at which point the same law firms that are now suing the company for manipulating the stock price to the upside, will refile a fresh set of class action lawsuits only this time accusing the company of tanking its own stock.

For investors who seek to join the class action, the cases are Isaacs v Musk et al, U.S. District Court, Northern District of California, No. 18-04865; and Chamberlain v Tesla Inc et al in the same court, No. 18-04876.